Palm Drive accepts emergency loan, seeks 'reimagine' proposals

SEBASTOPOL -- Cash-strapped Palm Drive Hospital is set to get an advance from the county of Sonoma on forthcoming funds in order to continue operations at least until the planned suspension of operations at the end of this month, and ideas to "reimagine" and "reinvent" the rural institution are being sought, thanks to new actions by the board overseeing the hospital.Other storiesPalm Drive counting down days to probable closure

The board of directors of Palm Drive Healthcare District at its Friday afternoon special meeting elected to accept an emergency bridge loan of up to $1.8 million from the county of Sonoma, according to an announcement. It's an early payment of funding already slated for the hospital that, due to the acute financial situation, is being released months ahead of schedule.

"This loan is a critical step for Palm Drive to safely initiate a termination of acute and inpatient care," said Chris Dawson, chairman. "Today, the hospital is on a cash-on-delivery basis for critical inventory, including blood from the blood bank. We need to assure patient safety as we terminate certain services at the hospital. Only with the county’s help are we able to do that."

The termination of services is necessary because the hospital is no longer financially solvent, according to the board. "Every effort that has been taken to improve revenue cycle management, reduce costs, stabilize operations and right-size staffing has been unable to counter the lower than expected patient census, related revenues and expanding competition mere miles away," the board said.

The district and hospital filed for Chapter 9 bankruptcy protection from creditors on Monday, the second such filing in seven years. The institution emerged from bankruptcy in 2010 after selling $11 million in bonds, but those funds are gone.

The bridge loan is a sign to the bondholders that all measures are being taken to ensure the safe transition of the facility, the board said.

"Without the loan and the understanding and patience of our bondholders, we would not be able to safely transition Palm Drive," Mr. Dawson said.Seeking ideas for the new Palm Drive

The board also took another critical step to safeguard the future of Palm Drive. During the meeting, the board agreed to the framework for a request-for-proposals (RFP) process for assessing ideas on what will come next. Establishing a long-term and sustainable business model for Palm Drive is a process that simply cannot be accomplished overnight, the board said.

"We needed to create a set of criteria that will allow the board and members of the stakeholder committee a way to assess the feasibility of the ideas that are coming to us," Mr. Dawson said. "This is every bit as critical as the bridge loan because it gets to the matter of what we will become in the next few months."

Following the termination of acute and inpatient care, the Palm Drive Healthcare District will focus on restructuring itself, the board said.

"While we are hopeful that a new and successful model can be implemented in the near future, our baseline objective is to work with our key stakeholders and the community to reimagine and reinvent ourselves to re-emerge within a short period of time as an innovative, relevant and sustainable organization geared to best meeting community needs," said Thomas Harlan, chief executive officer.